The Billfold Book Club: Suze Orman’s ‘The Money Book for the Young, Fabulous & Broke’

Suze

There are two Suzes.

I really like the first Suze. I’d say 90% of the book was written by the first Suze, possibly in combination with the first Suze’s ghostwriter/assistant. This Suze gives you exactly what she promises: a clear, straightforward explanation of how FICO scores work, how a 401(k) works, how to buy a car, and all of those other financial details that are extremely useful to people just getting started in life.

She’s even aware that her Gen X and Millennial readers are experiencing different financial realities than previous generations, and addresses her advice to fit these circumstances. Perhaps her most infamous piece of YFB advice is to go into credit card debt to finance your early career, since you won’t be earning enough money yet to pay for your necessary expenses.

(If you are familiar at all with the Suze Orman story, you’ll know that’s exactly what she did: when she got her first job at Merrill Lynch after six years of waitressing, she immediately bought a $3,000 professional wardrobe on credit. That was in the very early 1980s, and according to the US Department of Labor’s inflation calculator it would be the equivalent of putting $8,661 on your credit card today — just for clothes.)

So I really don’t have any problems with the first Suze. She seems cool.

But then the second Suze slips in.

This Suze is probably who we’ll look at when we read Helaine Olen’s Pound Foolish for July. This is the Suze who says “if you can’t follow my advice, it’s your own fault.”

In Chapter 5: Save Up, the second Suze lists some ways that a YFB adult can save money. These methods include:

  1. Drop your life insurance (if you are single with no dependants)
  2. Drop your landline
  3. Stop going to the movies every weekend
  4. Get a roommate

 

The last one in particular is presented as if you are currently living in a two-bedroom apartment by yourself and all you have to do is clear out some space for a second person.

Likewise, if you can’t get a job, the second Suze actually suggests pounding the pavement and cold-calling HR managers. (She cites an example where a young woman cold-called 10 different school principal’s offices, got five of those offices to invite her in for an interview that day, and ended the day with three job offers.)

It’s the second Suze who does not precisely condescend (she promised not to condescend, after all) but does occasionally snark:

“A trip to Cabo to decompress after a big project at work is not an emergency.”

“You won’t catch me telling you to cut back on the lattes and “simply” save $10 a day. As if saving $3,650 a year when you are broke could ever be simple.”

But lattes don’t actually cost $10 (ask Oscar the Grouch), most of us have already given up landlines and taken on roommates, and if anyone can replicate the 24-hour “10 cold calls, 5 interviews, 3 job offers” stunt, I’d like to interview you for The Billfold so please get in touch with me, okay?

When you present your financial advice as an outsized “don’t take that trip to Cabo!” you give yourself the privilege of skipping over actual financial decisions that YFB people make, which are more often “should I buy myself this pizza to decompress after a big project at work, am I ever going to make enough money to pay off the investment in my education and early career, what should I do if I’m already living with roommates and still can’t pay my rent?”

Before I turn the discussion over to y’all, I’ll remind you of one more piece of advice from Second Suze:

If you need to pay off your credit cards, all you have to do is go into your closets and take out anything you haven’t worn in a year or anything that has the tags still on. You’re going to sell all that stuff, but first you’re going to put that stuff in a pile, because Suze says: “I bet if you sat down and added up the cost of everything in that pile, it would account for a high percentage of the credit card balance you currently have.”

That’s why we can’t get ahead, fellow YFB-ers. It’s because we spend too much of our money on clothes, and because we’re not smart enough to pay off our debts by selling all of our outfits that still have the tags on.

 

Previously: “It’s Time to Discuss ‘Rich Dad, Poor Dad’”

 

 

Photo: Jason Meredith

 

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60 Comments / Post A Comment

Worgchef (#6,838)

Suze’s show has a segment called “Can I Afford It”. Every night people are calling her up asking “if I have $20k in debt do you think I should go ahead and buy a ski boat”. That experience, and that audience, is probably what drives the Second Suze narrative.

HelloTheFuture (#5,275)

@Worgchef What’s the question? ALWAYS buy the ski boat. ;)

ECW (#2,765)

@Worgchef Right. I read the book, and those little detours on savings as “90% of you are doing it right. But for the 10% of you who are cah-raaaazy lets recap. Don’t go to Cabo.”

OllyOlly (#669)

@Worgchef YES! I had to follow a “business show” for a class I took, and I followed Suze Orman. I basically took notes on all the things people called in about, and some people really do need a serious wake up call about where they stand financially and what is a reasonable splurge. I did feel like a big problem was that many people had a very abstract idea of what their retirement savings really meant, especially some of the people in their 40s who would call in.

@Worgchef Wait. What is a ski boat?

Beans (#1,111)

who are these mythical people with closets full of clothing with the tags still on? Literally never experienced that. Ever.

chevyvan (#2,956)

@Beans I end up with a shirt from H&M every once in a while. Avg price $12.99. But yeah, usually I am so damn excited about new clothes that I wear them the next day.

emmabee (#2,008)

@Beans I know some of these people/have been this person! In my experience they fall into three categories: 1) people who buy clothes they have no occasion to wear because maybe if they buy a fancy cocktail dress they will magically get invited to fancy cocktail parties 2) people who buy clothes they can’t fit into because they are definitely going to lose ten pounds soon and then they will fit and 3) people who receive clothes as gifts and don’t want to return them.

nell (#4,295)

@Beans Yep and anyone who has suffered the humiliation of Buffalo Exchange can tell you that reselling clothes is a fool’s errand. Maybe if you had like, heaps of designer handbags to consign at a high end shop you’d make a dent, but a $12 store credit ain’t never solved anybody’s financial problems.

@Beans I know they exist because I dated one such person. When she moved out she left behind at least $500 worth of shoes and I don’t know how much in clothes. She did manage finances in part by strategically returning things. But if you’re going to *sell* rather than merely return stuff of that sort you have to do it quickly before it goes out of style.

@Beans My own person like that had studied fashion in Italy; she tended to accumulate expensive and extremely fashionable clothes much the same way I accumulate musical instruments – as a habit, a default setting, that needs to be reigned in periodically before it gets out of hand.

nutmeg (#1,383)

@nell hahaha I have been told at Buffalo Exchange before that my clothes were too worn to be resold, but I could totally get them repaired and rewear them! It then got awkward when I told the lady, “Yeah, I don’t fit into any of these pants anymore.”

NoName (#3,509)

@Beans I used to have this – mostly because I was paid very well but overworked with no time for a social life so I’d self-soothe with trips to the mall. When I finally quit that job to go to grad school, I had I-don’t-even-know-how-much in Banana Republic suits that were 10 years old with tags still on.

@Beans I worked for a top women’s TV network (go ahead, guess) and our president once told us in a meeting that we should only be buying shows the way we should buy shoes – if we don’t want to go home and wear them (watch it) right away, it’s not worth the money. It actually informed my shopping habits more than my TV programming skills.

HelloTheFuture (#5,275)

@Lisa Lenner@facebook aaaaaaah but I never wear shoes in the house

ThatJenn (#916)

@HelloTheFuture Let’s say “if you don’t want to immediately wear them out of the store/invent an excuse to wear them immediately” then :)

But in any case, yes, this is a thing I was coming here to say: Orman’s own obsession is clearly with clothing, so she generalizes that to everyone. But seriously EVERYone I know who suffers with money fights more with eating out and the like. She kind of handwaves about that stuff in a half-useful way: ask yourself if this is a good or bad use of your credit card, bring lunch two days a week (I do sort of appreciate that she appears to recognize the pitfalls of going “I’m going to be super-virtuous and bring lunch EVERY DAY and if I ever go out I’m a FINANCIAL FAILURE” but perhaps she could extend this a bit to other meals out beyond dates), don’t buy very many $10 martinis. But I didn’t feel there was a real strategy for attacking that kind of lifestyle creep, only the creep of STUFF.

Perhaps I am just so used to reading this site and talking to friends in major cities, but I feel like most young broke people don’t live in places where they even CAN accumulate a lot of stuff. Unless it’s their parents’ house or something, in which case a big CHECK in the roommate column.

@nell Reselling at places like Buffalo Exchange or Plato’s Closet definitely is not going to net you a ton of cash but I have been selling my used clothing, shoes, handbags and jewelry on eBay since college. I literally “flip” things sometimes – buy nicer designer thing on great sale, wear once or twice, list on eBay, make at least 50% of my money back, boom. It does help if the items are slightly higher end and/or in demand, but it’s how I justify/continue with my shopping habit and keep second Suze off my back.

cmcm (#267)

@Beans The only person I know is my now exboyfriend’s exwife. She left a closet full of clothes when they got divorced, which he still had when he and I got together. So we (well, I, actually) sold it all on eBay and made £200-300 which was fun!

Heather F G (#6,074)

@JNC Musings Factory UGGGH why did I not read this Saturday before I went to Clothes Mentor for a whopping $16 for a pile of Ann Taylor dresses? I’ve been trying to “flip” some more unusual stuff via social media and all I get are likes. LIKE IT WITH YOUR DOLLARS, FOLKS.

notpollyanna (#2,841)

@Beans I had a roommate who did this, sort of. She went on ridiculous Target shopping sprees. (Always Target, only Target.) As the end of the month, if she didn’t have enough money to make rent, she went to Target to return things and began the cycle again. She wasn’t a clothes-horse, but she had hundreds of pairs of underwear; nothing special, just average cotton underwear.

HelloTheFuture (#5,275)

@Heather F G “Like it with your dollars” is now my new favorite catchphrase. I also want to create a social app that involves money and lets people put in a certain amount every month and like stuff with their dollars and other people can like THEIR stuff with OTHER dollars and at the end everyone has money?

Heather F G (#6,074)

@HelloTheFuture I would like that project with my dollars!

chevyvan (#2,956)

When I left grad school life and my grad school stipend (before actually graduating – that took 5 more years while working full time), I had about $10,000 in credit card debt. That’s because I used credit cards to get by at the end of the month, or for emergencies and semi-emergencies (like brakes for my car). I’m not saying that there no decisions I could have made better (there were LOTS and BIG ONES). However, the most upsetting thing was that I didn’t have anything good to show for all that debt. I didn’t have nice clothes, or a nice one-bedroom apartment, or cool gadgets, or trips to Europe. So I guess I fell (still fall) into “young” and “broke” but definitely not “fabulous.” Can she just write a book called Young and Broke?

HelloTheFuture (#5,275)

@chevyvan LOL I think the addition of “fabulous” was to boost our SELF-ESTEEM, you know, it’s all about the self-esteem

seakelps (#5,146)

@HelloTheFuture I missed the title and was trying to guess what YFB was and came up with “You’re Fucking Badass” which was pretty self-esteemy

ThatJenn (#916)

@HelloTheFuture Our self-esteem, sure, and also to let us know that she wasn’t going to make us go live a spartan, latte-less life.

@seakelps You know, she’s right, we ARE fucking badass.

milena (#3,288)

This was my beach read this weekend, just so I could participate in the discussion! I liked the book and even if I am not the target audience, I learned a lot — the chapter on buying a house was particularly helpful since that’s what I am doing right now.

Some of her advice is Real Talk bordering on Nutso, but the part where she talks about using credit to pay for living expenses while you’re starting your career felt OK to me, as long as you’re holding yourself accountable. Seeing the debt pile up would light a fire under my ass to work harder and get that promotion sooner rather than later, and to make whatever decisions I need to make to move my career further. I also don’t think it’s cray for her to drop money on getting a professional wardrobe — at the upper levels, the good performance is expected and what propels you forward is your image. She did well in cultivating a good image from Day 1.

And the getting a roommate bit: You’d be surprised at the number of people I know who live alone or with roommates but in a very comfortable setup and who are otherwise broke. I think her point is that living alone is a luxury and if you’re broke, you can’t afford that luxury.

What I did not like was the constant regurgitation of “check your FICO score”, etc. Yes, lady, I read that chapter already. Thanks.

Overall, I thought it is a good book for people who have no grasp on their finances and need a starting point. I would like to see a 2014 version of this, with more advice on student loans, updated advice on buying a house, and maybe more on how to budget/see where your money is going (i.e. tell us about Mint/YNAB).

HelloTheFuture (#5,275)

@milena Yeah, I didn’t see a lot in the book that felt out of date, but a 2014 version would be nice.

ThatJenn (#916)

@milena She wants us to both finance our living expenses on credit cards while we are very young and broke, AND not ask for raises or promotions but just make ourselves indispensable until people notice and promote us. I feel like that’s ESPECIALLY bad advice for women, who I have to assume are her main audience, when not paired with a good exit strategy/timeline for if you ever do figure out they’re just never going to promote you or give you a raise.

The “check your FICO score” bit that really amused me was the claim that you’d get a worse interest rate on a loan if you’d only checked other types of credit scores. I mean… no. You might be SURPRISED by the interest rate you get if you haven’t checked your actual FICO score but only looked at other types of scores, and maybe you’d wish you had waited to apply for the loan given the new information, but whether you have checked it or not doesn’t actually impact what your interest rate will be.

LookUponMyWorks (#2,616)

Okay, big caveat: I just got the book from the library and only had a chance to scan it. But in my skimming, I came across a passage where she advocates putting money in a savings account (retirement account, maybe?) that would obviously have at least an 8% interest rate. I just laughed at that point. A hollow, bitter laugh.

Blackbird (#2,196)

@LookUponMyWorks I think that bit was specifically about retirement accounts. But yeah, I read the original 2004 hardback and pretty much every interest rate mentioned seemed…incredibly optimistic, to say the least. (ETA: At least by current, 2014 standards.)

HelloTheFuture (#5,275)

@Blackbird believe it or not my retirement account earned 14% last year. So… it is possible. But completely out of my control!

Blackbird (#2,196)

@HelloTheFuture Nice! I think the main interest I ran into was that made me go “man, I wish” savings accounts getting something like 4% interest. If someone’s seen an account like that, let me know so I can put all my money in it, okay?

LookUponMyWorks (#2,616)

@HelloTheFuture wow! spill the beans, where should I be investing my retirement monies?

HelloTheFuture (#5,275)

@LookUponMyWorks I have no idea. I think 2013 was just a good year?

To be fair, I actually *am* currently living in a two-bedroom apartment by myself and all I would have to do is clear out some space for a second person.

(Though I’m not young, nor fabulous, nor broke. So maybe I’m not her target audience either.)

HelloTheFuture (#5,275)

@Glen Raphael@facebook You are totally fabulous!

notpollyanna (#2,841)

@Glen Raphael@facebook I live alone in a two bedroom, but I could not just “clear out” that room. It is full! It is my studio. I am a bookbinder. Part of why I live alone is that I would feel guilty with roommates, taking over the whole apartment with my collection of objects, all of which I use. (I tend toward minimalism and keep evaluating my stuff. I want to have less stuff, but I use all of it. All those bookbinding and craft supplies. All those random old books are for repair practice, etc.) But! I’m moving in with my boyfriend soon, my boyfriend who also has a lot of stuff, and rent will go down a little ($152.50/month).

NoName (#3,509)

@notpollyanna I also dabble in bookbindery, and fiberart, and clothing design, and that stuff takes up a lot of room, absolutely.

NoName (#3,509)

I was under the impression this book was for those people everyone knew in college – the ones who financied an upper-middle-class lifestyle with credit cards and just paid the minimum balance every month. I remember they had new cars, lived in the new apartment communities out by the mall, played golf, and barbecued on gas grills over summer break with no discernable gainful employment.

HelloTheFuture (#5,275)

@NoName I knew someone like this in grad school. She said “I know I’m never going to buy a home, so I am entitled to at least a home’s worth of debt in other expenses.” She had the most awesome wardrobe, apartment, vacations, etc.

NoName (#3,509)

@HelloTheFuture “She said ‘I know I’m never going to buy a home, so I am entitled to at least a home’s worth of debt in other expenses.’”

I can’t even wrap my mind around that.

ThatJenn (#916)

@NoName @HelloTheFuture My ex-husband specifically said “I’m planning to make $100k or more per year in household income in the future [once I finish my PhD in the humanities and magically land a tenure-track job that pays that much, because my parents are professors in STEM fields and that's how much they make], so why should I have to live a spartan lifestyle now when I’m going to be able to pay off the student loan debt and credit card debt once we get those high-paying jobs?” Never mind that his idea of what lifestyle you could live EVEN on $100k/year was way off as he was looking at his parents who had a huge amount of credit card debt.

Ultimately, between major gifts, loans, having others pay for things, and credit card debt, he spent about $200,000 more than he earned over the seven years he was in grad school (including joint expenses with his ex and with me, but not including one year of non-funded grad school). His household income with me was about $35k and we basically doubled that in living expenses. No amount of pointing out that our payments on a house in a more expensive area and his student loan debt (bigger than our primary mortgage) would make even $100k/year not look like what he thought, if somehow we were able to hit that income magically when he finished school.

All I’m trying to say is: magical thinking. It exists and I have seen its face. This dude while he was in grad school fit exactly the person you are talking about – new car, nice fancy apartment, expensive hobbies/stuff, no other employment beyond his $15k/year stipend, which would actually be enough to live on here if you had no dependents and no truly major emergencies.

eatmoredumplings (#3,808)

@ThatJenn Wow. I know med students who live that way, but I always thought it was a med student/grad student difference, not something a grad student would ever buy into. See, med students are living off of massive, massive loans anyway, so saving a little bit on cost-of-living stuff seems difficult and pointless, so might as well have the nicer apartment, furniture, etc. It’s ok because they can expect to be making upwards of $150K a year to pay off those loans and maintain that standard of living, lots more if they get into a lucrative specialty.

Grad students, on the other hand? I thought most of us knew that our stipends weren’t going to be followed by salaries an order of magnitude higher, so might as well get used to living on them now.

ThatJenn (#916)

@eatmoredumplings I think *most* of us definitely did know that. :) I was, at the time, a PhD student in the physical sciences, and while I anticipated an increase after, say, my postdoc, I really didn’t foresee it being a huge jump.

Stina (#686)

Both the explanation of the FICO score and of the Living Variable Trust was super helpful. I also liked that she generally encouraged young people to take a risk when they are young and go for a career that they can at least like instead of going for the big paycheck.

Occasionally I would have appreciated more detail on how she came to a few conclusions. There was one on starting your own business where she recommended spending no more than $12,000 on startup costs and no longer than 18 months where it can’t pay for itself. “Pay for itself” meaning you are making enough profit to pay yourself a livable wage? Maybe? I wasn’t sure. I mean as someone who has no interest in starting a business $12,000 sounds ok but I would guess if you’re buying a restaurant say that would cost more than that I would guess.

And like others I guffawed at the 8% per year assumption of how much your investments would earn you.

ThatJenn (#916)

@Stina Yes, I agree. She was clearly trying to avoid too much math (sigh) but more info on assumptions and calculations would be helpful. Like… at one point she says that if your stock value drops 78%, it’ll have to grow 350% to get back to where it was (I’m with her to this point) and “that works out to a 7.8% annual gain.” Uh… over what time period? What does that even mean? And didn’t you just tell me that 7.8% would be low?

Her interest/growth rates were amusing. Like, haha, 1-2% in a savings account. And be careful, because your home value may only appreciate a LITTLE over the next few years instead of LOTS. Right. Your 2004 is showing. (Obviously I can’t blame her for not seeing the future, but it still amused me.)

Some of her breakdowns of concepts really helped me. I’ve looked into many of these things and still learned from her explanations of different financial instruments and terms. That said, occasionally she’d throw around words that didn’t appear to be defined (as in, “your 401(k) will be managed by a brokerage firm or a fund company”) right after showing you that “debit card” was in the glossary. Kind of odd.

HelloTheFuture (#5,275)

@ThatJenn A brokerage firm is a firm that handles brokerages. Obviously.

ThatJenn (#916)

@HelloTheFuture Or perhaps it is a firm statement to calm down that breaks your rage.

ThatJenn (#916)

So, a thing I really appreciated was that she DID acknowledge that your pay may actually be too low to cover your basic living expenses. That’s a thing we keep saying we want to see in financial advice (and a spoiler for Helaine Olen, too), so it’s refreshing here. It was also nice that she acknowledged that your priorities may be different from others’, or you may want to move on with some other financial aspects of your life even if you still have some credit card debt. I think the whole approach of “if you have credit card debt, SHUT DOWN EVERYTHING until it is paid off” is probably one of the reasons so few of us 20-somethings have any retirement savings. She gives a suggested order for tackling things, has a few things she won’t budge on that seem pretty reasonable to me, and (this part is key) gives tips for if you go off her suggested order of operations. That part felt respectful to the reader, less “I am the guru and you have no sense if you stray from my path even a little” than many personal finance personalities can muster, and I really appreciated it.

That said, she has got to stop talking about clothing like it’s all we care about. Really, Suze Orman, you’re going to make retirement accounts/investment options be like straight-leg or boot-cut jeans? Sigh.

I learned a number of things in this book that are actually on my list to research to make sure they’re true:
-retail cards being separate from credit cards in FICO’s assessment of a “good mix of credit” (my credit score dropped when I stopped having any installment or real estate loans and went to only credit cards, so if they really DO count differently maybe I’ll open a retail card)
-apparently you can sell a car you’ve been leasing rather than giving it back and then pay off the balance? who the heck knew that? (I don’t want to lease a car, I just thought this was fascinating)

There was also some really good, thought-provoking advice in there. Putting your loans from family members in writing and paying interest is one I already adhere to (my mom holds my car loan and we did research to figure out what kind of interest she should charge me – low enough that it was a good offer for me, high enough that she’d make more than keeping the $ in savings and also not have it considered a gift). I also found the idea about people’s respect for their money being indicative of how they can/will respect you kind of interesting too. It is true in my experience, though perhaps discouraging.

Orman only once or twice falls into a statement that I find really annoying in these kinds of books, but it’s extra-annoying in a book supposedly designed for financial “beginners.” She does a calculation where she says “if you didn’t spend $X on [frivolous thing] and instead invested it where you could get 5% return, you’d have [however much] in just 10 years!” or something along those lines. OK, fine – but where and how do you expect me to invest? Even putting aside the question of whether that’s a realistic rate of return in our 2014 world, please give a concrete example like “if you put that in your Roth IRA and it’s invested in a fund at 5%…” or whatever. Unless it’s part of an already-planned contribution retirement accounts, I’d guess most of us YF&Bers aren’t actually investing the money from our paycheck that doesn’t get used to pay for stuff; we’re at best keeping it in our savings accounts. I might find it a more convincing and relevant argument (and in fact I do use this with myself) to think, I’m not spending $100 a month on [frivolous thing] so I’m paying down my debt that’s at 8.9% $100 a month faster and saving additional money that way.

I have so much to say about all the house stuff that I am saving it for a totally separate comment.

ThatJenn (#916)

OK so her advice on housing! Obviously she is writing from 2004 (“mortgage debt is truly good debt” and her downside prediction being that the housing market might hold steady or only increase a little), but I still find I have a lot to say about this anyway.

My main beef is that she doesn’t emphasize having much money BEYOND your down payment. She kind of half-heartedly mentions you’ll want to get an emergency fund pretty quickly after buying a house and that you won’t be able to call the landlord about it, and does say that if you can’t afford a down payment you can’t afford a house, but not much beyond that. I’m sure I’m biased because of the tens of thousands of dollars I’ve spent on home repairs in the 10 years I’ve been a homeowner, but really, those things are important! Especially since she also says she’s against escrow accounts (which are actually required in some states) that make you pay your insurance and property taxes each month with your mortgage and refund any extra at the end of the year, kind of like withholding income taxes. She would rather you save up for those. OK, so I’m supposed to start saving for insurance, taxes, and repairs after I buy the house and you’re not going to remind me of all that together so I can really realize how important it is? (I appreciate the argument that escrow accounts are silly if you could be earning interest on that money and managing it yourself, but it’s just a big enough responsibility that I feel like it deserves a little more emphasis since you could literally lose your house if you don’t plan ahead for this carefully.)

I guess also home insurance must have been much less expensive then – she says $25 per $100k of home value per month, but I pay more like $160 per month for my $100k house. She also says that you can “pay for all your home repairs” with the tax break you get on mortgage interest. Uh, really? I guess if you have a nice new expensive home, your repair costs are lower than average while your tax deduction is higher, but if you are/were recently broke, you probably bought a lower-cost home (so lower deduction) that needs more repairs (higher costs). It was just a weird throw-away line. Don’t most people UNDERestimate how much they’ll spend on home maintenance if they never owned before? Do you really want to make it seem like this is just not something they’ll need to worry about? Or is it all implied that your home value will go up so you’ll be able to get a HEL or HELOC to pay for these repairs, lessening a need for savings? This isn’t said in the book but that assumption might explain why she was under-emphasizing this stuff.

An aside: My mom and I actually had a conversation about this the other day – her second career in semi-retirement is as a real estate agent – and she asked why people of our generation believe they can purchase a home if they have no extra savings beyond their down payment. This book, maybe that’s why. (I told her it’s because they have family members telling them to buy a house because obviously people in their late 20s/early 30s can buy houses, their parents did even earlier, after all, but their parents are unaware that they are operating in a very different world with lower pay, higher student loan payments, etc. than they did and thus have lower savings rates, and she actually kind of liked that answer. That was good because my hackles went up the instant she asked about “people in YOUR generation.”)

Last, but not least, Orman definitely has a whole public personality based on her making rulings and decrees about certain things, but in this book she usually backs them up. The one statement (that I agree with, to be clear!) she makes multiple times in the book that I didn’t see explicitly justified is her rule that you should never pay off credit card debt, no matter how high the interest rate, with home equity debt (a loan or line or credit). At first I thought this was about not paying off unsecured debt with secured debt, but since she says paying off student loan debt that has a 2% or more higher interest rate than the home equity loan/credit line is OK, that’s definitely not the distinction. I assume she’s working on the whole “don’t enable financing your higher standard of living than you can really afford with your home equity” angle, which I 100% agree with – wiping out credit card debt with secured debt or with savings you actually needed/wanted definitely makes it feel like the painful consequences went away and maybe it’d be OK to run that debt up again, see: me running up my credit card every time I wiped my emergency fund to pay it off, until I stopped letting myself wipe the emergency fund and made myself painfully pay myself back – but she doesn’t actually explain her reasoning, as far as I saw.

ThatJenn (#916)

@ThatJenn OH and I almost forgot the one thing that actually made me gasp out loud at the book. Please, folks, don’t buy a house with someone with bad credit and put them on the title/deed but not the mortgage. Guess what? They now own half (and they or their heirs or whoever can obligate you to sell/refinance into just your name and pay half the purchase price) without any obligation whatsoever to pay the mortgage. So… if you owe $100k on a $120k-value house, they can basically demand $60k to get their name off the title if you split or anything, leaving you with $60k cash to come up with, $20k in equity and a $100k loan.

There are some subtleties about this that I’m skipping over (joint tenancy clauses, the fact that nobody wants to think about splitting up when they’re buying a home together), but yuck. I appreciate her comment that you MAY want to think about waiting to put them on until you can both qualify for an affordable refinanced mortgage together, but I think that should have been the lead advice, not an afterthought.

HelloTheFuture (#5,275)

@ThatJenn oh WOW, that really does sound like horrible advice.

solongefarewell (#4,521)

I absolutely do not believe the cold call story. I have been working in offices that do different types of work for over 10 years in several different cities and every single one of them treated walk-in job seekers and cold callers as security threats.

HelloTheFuture (#5,275)

@solongefarewell Maybe it was from the 1980s. I mean, I figured it had to be at least a generation old. That stuff wouldn’t fly now.

Lady Bacon (#6,843)

@HelloTheFuture – off topic, but could you direct me to where you have written about your former business? I don’t want to call it your “failed” business, but you know, the one that netted you -15k and a whole lotta wisdom?

HelloTheFuture (#5,275)

@Lady Bacon I’ve written about this in a few places. There’s a good piece on The Toast titled “I Tried To Be A YouTube Star And All I Got Were These Horrifically Embarrassing Videos.” :)

honey cowl (#1,510)

What the fuck, who has thousands of dollars of clothes with tags on in their closet?! I’m doing all right (I have no debt, but I’m definitely not rolling in the dough) and I have not a single piece of clothing with the tag still on it….?!?!

ThatJenn (#916)

Ohhhh also books like this often assume that the student loans you got were not at all your choice and that they’re a fact of past choices, not current choices. I was somewhat surprised not to see a description of what kinds of loans might be a good choice if you are still in a position (or again in a position) to make that choice. But then, I don’t have loans (I’ve been quite fortunate) so perhaps I am missing something about that process. I know you basically get offered a package and mostly have the option to take it or leave it, but for instance – are there types of loans it might be best to avoid if possible?

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